Investors weigh U.S. economic data, fiscal cliff and Mideast news

SAN FRANCISCO (MarketWatch) — Gold futures finished higher Wednesday to reclaim the $1,730-an-ounce level, as disappointing U.S. economic data and developments in the Middle East boosted the metal’s safe-haven appeal, and as concerns about the fiscal cliff weighed.

Gold for December delivery
US:GCZ2
rose $5.30, or 0.3%, to settle at $1,730.10 an ounce on the Comex division of the New York Mercantile Exchange. It traded between $1,720.50 and $1,734.

December gold on Tuesday fell $6.10 an ounce, as worries over Greece’s next bailout installation sent the euro lower against the dollar, pressuring dollar-denominated commodities.

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On Wednesday, “news from the Middle East that Israel has bombed Gaza targets today while killing [a] Hamas military chief,” provided support for gold, said Jason Rotman, president of Lido Isle Advisors, a Newport Beach, Calif.-based alternative-investment firm. “The inherent safe-haven status of gold comes back into play … when crisis events are perceived to be more imminent.”

Also in play for gold, two days ahead of his first formal post-election meeting with congressional Republicans, President Barack Obama held a news conference Wednesday that began shortly before Comex floor trading for gold ended.

Traders were looking for signs of the White House’s strategy for the so-called fiscal cliff — the billions in automatic tax hikes and spending cuts that will take effect unless the Obama and Congress take action. No strategy was apparent in the news conference as of the Comex close. See: MarketWatch’s blog of President Obama’s news conference.

“Positive comments about the ‘fiscal cliff’ may lead to downward pressure on gold bullion,” said Dublin-based Mark O’Byrne, executive director at GoldCore. “However, the scale of the fiscal challenges facing President Obama and Congress mean that any weakness will likely be short-term.”

In the currencies market, the ICE dollar index
DXY, -0.30%
which measures the greenback against a basket of six rival currencies, was lower at 80.954 from 81.097 late Tuesday. That helped gold move higher because a weaker dollar makes the metal cheaper for holders of other currencies to buy.

January platinum rises as traders digest a report that said recent strikes in South Africa hurt supplies of the metal.

Other metals finished mostly higher.

December silver
US:SIZ2
added 39 cents, or 1.2%, to settle at $32.88 an ounce.

December palladium
US:PAZ2
closed up $4.95, or 0.8%, at $641.55 an ounce.

And platinum for January delivery
US:PLF3
rose $5.20, or 0.3%, to $1.591.60 an ounce. Johnson Matthey’s Platinum 2012 Interim Review said on Tuesday the platinum market likely will see a deficit of 400,000 ounces due partly to a recent string of labor strikes that disrupted mining activities in South Africa. See The Tell: Platinum market set for supply deficit: report.

Copper was the outlier among metals. Copper for December delivery
US:HGZ2
finished down nearly 2 cents, or 0.5%, at $3.45 a pound.

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